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September 30, 2005

Dell to Stop Free Home Delivery of Computers

by Sam Savage

SAN FRANCISCO -- Dell Inc. will stop its practice of sending low-end computers to customers homes without charge in order to cut costs, the company said on Thursday.

Starting on October 10, Dell's free shipping offer on basic models will apply only to people willing to pick up their computers at the post office, said Jennifer Davis, spokeswoman for Dell's U.S. consumer business. Customers will have to pay extra for home delivery.

Dell's direct sales model helped it become one of the lowest-cost computer makers as it bypassed retailers. But aggressive price-cutting caused the Round Rock, Texas-based company to miss analysts' revenue-growth forecasts last quarter.

Now, Dell wants to trim costs and boost revenue. On Wednesday, Chairman Michael Dell unveiled a line of high-powered luxury desktop computers and notebooks starting at $1,099 compared with $299 for the lowest-priced models on the company's Web site.

"We are always looking for ways to pass savings on to our customers," Davis said on Thursday. "We look at ways to keep costs low and be able to deliver systems within the value and pricing that people want."

The new shipping option is convenient for customers who aren't at home when deliveries are scheduled, Davis added. Now they can pick up their computers at the post office after work or on Saturdays, depending on hours of operation, she said.

Davis said the fee for home delivery had not been determined. Post-office pickup will eventually be made available on all Dell consumer computer models, including the new luxury line called XPS, Davis said.

Dell's Web site offers free home delivery on some models of desktop and notebook computers. Shipping costs amount to $99 or more for three to five-day ground delivery, according to Dell's Web site, but Davis said free shipping is "very common" because of its popularity among customers.

Dell is among shippers taking part in the Postal Service's "hold for pickup" program, launched on Thursday, which is aimed at consumers who want to save money by picking up packages held for them at the post office.

Customers have 10 days to pick up parcels before they're returned to shippers, the Postal Service said in a statement on its Web site.